S.D. jury says county not covered for dairy lawsuit

January 09, 2012

MITCHELL (AP) — Aurora County doesn’t have insurance to pay a possible $5 million claim by a dairy farming family that contends county zoning regulations forced them out of business, a jury concluded. Lawyers for the South Dakota Public Assurance Alliance had argued the company, which provides insurance to local governments, should not have to pay compensation in the case. Aurora County officials knew about the dispute when they signed up for coverage, but did not inform the insurer, as they were required to do, attorneys for the alliance said. On Friday, a jury in neighboring Davison County, in southeastern South Dakota, agreed the Public Assurance Alliance did not have to pay for Aurora County’s legal defense, or for any damage claims arising from the case. The E.L. Thompson dairy farming family, which did business as Thompson Farms, sued Aurora County in April 2002. The Thompsons contended a 1998 county zoning ordinance that limited their number of dairy cows forced them to sell their operation. The Mitchell Daily Republic reported (http://bit.ly/zhfSss ) that the Thompsons asked for $5.6 million in damages. Following a trial, Circuit Judge Bruce Anderson ruled in February 2009 the county had violated the Thompsons’ rights and taken their property without payment. Anderson delayed a decision on how much money the Thompsons were owed until the legal dispute over insurance coverage was resolved. Court filings say Aurora County bought insurance in March 2001, which included coverage for unknown claims dating back 10 years. Two months before, in January 2001, Thompson Farms attorney and former South Dakota Attorney General Mark Meierhenry had notified the county that his client was considering a lawsuit over the zoning ordinance. The Davison County jury concluded the Thompson lawsuit was not covered by insurance because Aurora County knew of the dispute. Its newly purchased insurance policy covered only unknown retroactive claims, court filings said.